February 2, 2007, Newsletter Issue #50: Medical and Dental Expenses

Tip of the Week

Medical and dental expenses are considered an itemized deduction. In order to qualify for the itemized deduction, the total amount you paid for these expenses in 2006 must be more than 7.5% of your adjusted gross income. As an example, let’s say your 2006 adjusted gross income was $40,000; you need to have $3,000 of qualifying medical expenses before taking any deduction.

A deductible medical expense includes payments for the diagnosis, cure, mitigation, treatment, and/or prevention of disease. The costs can affect any part or function of your body. Medical expenses also include dental expenses, supplies, equipment, and diagnostic devices needed. Medical expenses also include the travel costs to and from your doctor’s office. Included in this category are also medical insurance premiums you paid, and any amount paid for qualified long term care. Some of the costs paid for long term care insurance may be deductible, also.

The IRS allows you to claim medical expenses paid for yourself, your spouse, your dependent child, and other dependent individuals (such as a handicapped relative).

Some medical expenses you may not include are any expenditures that are mainly beneficial to your general health (such as over the counter drugs – excluding insulin). You also are not allowed to deduct any cosmetic surgery that is purely cosmetic in nature (such as a hair transplant).

The IRS Publication 502 Medical and Dental Expenses contains all the information you need about this subject. Refer to it for more help regarding what is considered a medical expense and what is not. Publication 969 – Health Savings Accounts may also come in handy.

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